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10Jun 2015

Canadian Mid-Market M&A: Acquirer Origin

Posted By: Ari Cuperfain

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Canadian companies and investment funds remain by far the most active acquirers within the Canadian middle-market, representing approximately 80% of acquisitions by deal count. Due to the volatility of acquisitions by foreign entities, the share is expressed as a 12-month trailing average in the chart above. Not surprisingly, U.S. entities are the most active of foreign acquirers in the Canadian mid-market, owing to its robust M&A market, and our long-standing economic interdependence.

In 1Q 2015, foreign acquirers conducted only nine acquisitions in the Canadian middle market out of the 66 reported. The US$133 million sale of SkyWave Mobile Communications to ORBCOMM was the largest middle-market acquisition by a U.S. company this past quarter. Japanese alternative investment firm Ai Holdings and U.K.-based Antofagasta PLC also acquired Canadian businesses in 1Q 2015.

Generally speaking, as transaction sizes increase, there are a greater proportion of foreign acquirers, particularly in transactions greater than $250 million. The graph below shows the 12-month trailing average for the proportion of foreign acquirers in each size range. Since 2012, 26% of acquisitions in the US$251-500 million range were by foreign acquirers, compared to only 19% of acquisitions in the US$5-50 million range. This under-representation is likely due in part to potential foreign acquirers not being contacted when these Canadian businesses are available for sale.

If you found this post interesting, you may want to explore our 2014 Canadian Private Equity Report where we discuss trends in private equity as they pertain to the Canadian market.